Definition
An Indemnity is a contractual provision that allocates specified losses, costs, claims or liabilities to one party when defined events occur.
Human Explanation
It states which party must bear defined exposure if a situation described in the Contract occurs.
Why it Matters
Indemnity clauses can materially change the allocation and potential scale of Risk between contractual parties.
Conceptual Boundary
The scope and enforceability of an Indemnity depend on its wording, applicable Law and the circumstances. It is not automatically unlimited and should not be interpreted from its heading alone.
Practical Perspective
Review should examine triggers, covered losses and claims, exclusions, limits, procedure, control of defence, interaction with insurance and Liability clauses, and seek qualified advice where exposure is material or unclear.